This story is part of Forbes’ policy on Malaysia’s richest people in 2024. See the full list here.
The IOI Group in Malaysia has long focused on two businesses: palm oil and real estate. Of the two, palm oil, owned by IOI Corp. , is the larger, with a market capitalization of 25 billion ringgit ($5. 3 billion), by comparison. with a valuation of just 12 billion ringgit for the also state-owned IOI Properties Group. While the group’s founder, Lee Shin Cheng, first established the real estate business in 1975, a series of strategic acquisitions in the 1980s and 1990s helped Lee IOI Corp. it becomes the third largest manufacturer of palm oil thanks to its profits in Malaysia.
The two companies are also divided by kinship. Yeow Chor, the eldest son of IOI’s late founder, has been running the palm oil sector for a decade, while his younger brother, Yeow Seng, is in charge of the real estate portfolio. .
“Our father had a fondness for both businesses,” Yeow Chor, 5 years old and 7 years old, said in a telephone interview. “The return cycle of the property is much faster than that of plantations, which have a longer gestation period. It will take five to six years for the plantation to make smart profits. Lee Shin Cheng led both corporations until he stepped down as CEO of IOI Corp. and IOI Properties in 2014 and appointed his two sons to lead the company. The founder remained as executive chairman of either of them until his death in 2019.
In 2014, the founder of the IOI Group, the late Lee Shin Cheng (center), appointed his youngest son, Yeow Seng (left), as head of IOI Properties, and his eldest son, Yeow Chor (right), as head of the plantation business.
Ten years ago, the Department of Labor intended to allow the two brothers the opportunity to expand their own business on their own. “Our father wanted to give his two sons the opportunity to expand their own business,” Yeow says. Choir.
The palm oil industry still accounts for the majority of the Lee family’s $5. 35 billion net worth. However, the real estate sector is becoming vital as a counterweight to the volatile palm oil sector. IOI Corp. ‘s profit fell 26% to RM11. 6 billion. in the fiscal year ending June 2023, as crude palm oil costs fell from last year’s all-time highs. Conversely, IOI Properties’ earnings remained strong at RM2. 6 billion in the same period, supported by the strong contribution of workplace buildings. grocery shopping in malls and hotels.
IOI Properties currently owns RM36. 1 billion in assets in China, Malaysia and Singapore, with Lion City accounting for around 64% of homes through market value.
“We are very positive about Singapore’s economy,” Lee Yeow Seng, 45, chief executive of IOI Properties, said in an interview at the IOI City Resort in Putrajaya, the administrative capital of the Malaysian government, 25 kilometers south of Kuala Lumpur. Site of the Dunlop Estates plantations, the building serves as the headquarters of the Lee family’s IOI business empire.
However, IOI’s name may soon become better known as the company prepares to open its flagship center and largest project in Singapore, IOI Central Boulevard Towers, across from the iconic Lau Pa Sat street vending center, in the middle of the financial district. In 2016, IOI Properties surprised experienced developers such as Mapletree Investments (owned by Temasek) and a joint venture of Hongkong Land and billionaire Li Ka-shing’s Cheung Kong Holdings by beating them out with a bid of S$2. 6 billion. landed at the main site. The workplace complex, which costs about S$4 billion (including the land charge), includes about 1. 3 million square feet of net leasable area spread across a seven-story podium, a 16-story tower and a 48-story skyscraper.
Lee’s bet on Central Boulevard looks promising, as about 50% of the office area is already rented, adding tenants such as Amazon and Morgan Stanley with rents above S$11 per square foot per month, in the end by the end of current rents in monetary terms. Districts. Once fully leased, it estimates the assets would bring in at least S$180 million in annual rental income, which would have accounted for around 20% of the group’s profits for the fiscal year ending June 2023. “Singapore’s overseas business network has remained intact, while multinational companies have continued to establish their regional headquarters in the city-state, with many of them taking advantage of its vast pool of skills, tax incentives, a diversified economy and modern infrastructure,” said Calvin Yeo, managing director of Knight Frank Real Estate Representative, he said via email. Occupancy levels of major office buildings in the CBD stood at around 95% in March.
Building a Legacy
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OI Properties’ investment history in Singapore dates back to 1996, when it purchased an advertising asset in the Bugis district, on the edge of the Central Business District. IOI then invested in Sentosa in 2007, 11 years after its first foray into Singapore, in a residential assignment with Singaporean billionaire Chua Thian Poh’s Ho Bee Land. In recent years, Lee has doubled down on his efforts in Singapore, expanding his investments with partners and wearing down solo developments. Lee explains that Singapore’s appeal lies in its evolution from a local city to a regional and now global city. “Singapore is not just positioning itself as a natural monetary center,” he says. “It has a global personal banking center, with many family offices moved to the city. It is a well-planned and livable global city. All those family offices need. . . And sometimes they’re willing to pay the most reasonable money for high-end addresses that fit their customers’ rich image.
In 2011, IOI Properties invested in South Beach, a hotel, workplace, and residential complex developed and jointly owned with billionaire Kwek Leng Beng’s City Developments. Last November, Lee, through his personal company, Shenton 101, submitted the most productive offer for Shenton House. , one of the oldest workplace buildings in Raffles Place, on the border with Marina Bay, for S$538 million. The assets will eventually be injected into IOI Properties and transformed into an apartment complex for workplaces and services with a combined net leasable domain of approximately 500,000 square feet. “You can’t pass with Marina Bay,” Lee says. There is not much land available in the domain. There is pent-demand and scarcity of sources in the future.
Of course, developers go into debt for a task like Marina Bay, and loan repayments are higher thanks to higher interest rates. At the end of December, IOI Properties’ debt level stood at RM18 billion, up 20% from six months earlier, and the best among Malaysian index developers, according to Bloomberg. But Lee was worried. It says the increased debt load is temporary, as it plans to sell some of its workplace and hotel assets to REITs that will be indexed on the Singapore Stock Exchange in two to three years.
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As IOI Properties completes its flagship office building, it is preparing to market the nearby Marina View Residences, which, when completed in 2028, would house the 350-room W Hotel and the 683-unit W Residences. “It’s almost time to reap the rewards of those investments, with IOI Central Boulevard set to start turning a profit in 2025 and Marina View in 2026,” Tan Kai Shuen, an analyst at Hong Leong Investment Bank, said by email.
Despite the slowdown in demand for luxury homes due to cooling measures adopted by the government last year, Tan believes W Residences will be sold due to the dearth of such projects in the CBD. “Even a phased sale would make a significant change and not a significant contribution to the group’s finances,” he says.
IOI Properties’ net profit fell 72% to RM296 million in the six months ended December 2023 from a year earlier, while cash fell 8% to RM1. 25 billion, due to lower contribution from its real estate projects in China and Malaysia. Despite these results, the percentage value increased; On April 2, it nearly doubled the point from the previous year, at about 2. 16 ringgit. And analyst Tan sees more upside potential, maintaining a buy score and a price target of 2. 95 ringgit.
While IOI Properties is expanding in Singapore, it has not stopped expanding in its country. In recent years, IOI Properties has transferred giant tracts of accumulated farmland through IOI Corp. in the municipalities. Its crown jewel, the IOI Resort City in Putrajaya, contains two 31-storey towers (one of which houses the group’s headquarters), IOI Square (which houses several government offices), 4 hotels, an 18-hole golf course, residential condominiums, and IOI City Mall, Malaysia’s largest grocery shopping complex with a gross area of 2. 5 million square feet. According to Lee Yeow Seng, the company is spending 1 billion ringgit to add 1 million square feet to the complex, which attracts around 30 million visitors a year. .
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The company is also positive about its residential and hospitality allocation in Singapore. Behind Shenton House, IOI Properties is behind Marina View Residences, which sits on a 7,817-square-meter plot of land it purchased from the government in 2021 at the height of the Covid-19 pandemic. It paid S$1. 5 billion for the land and will spend S$1 billion to build the luxury hotel and apartment tower. “It’s a rare piece of land,” says Lee. The government rarely sells hotel land in Marina Bay.
While demand for luxury residential housing in Singapore has slowed since the government imposed a hefty 60% tax on foreign buyers last year to moderate asset prices, Lee is confident there will be strong buying interest in W Residences when IOI Proconsistent withties starts marketing. the task until mid-2024. ” A number of Singaporeans can invest in this task,” Lee said, adding that he expects to sell the apartments for between S$5,000 and S$6,000 per square foot, with smaller one-bedroom sets selling for S$3 million. The entire task is expected to generate profits of RM 8. 6 billion.
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Despite high interest rates and real estate restrictions, the outlook for Singapore’s asset market remains promising due to the city’s position as a hub for business and entertainment, prominent events such as Taylor Swift’s concerts. Housing costs are expected to continue to rise in 2024,” said Xian Yang Wong, head of real estate research at consultancy Cushman.
IOI Central Boulevard Towers in Singapore.
The W Marina Bay allocation excites Lee, as hotel profits in Singapore have returned to pre-pandemic levels, and average room rates hit all-time highs at the Formula 1 Grand Prix in September 2023. The overall profits of the hotel sector are expected to rise to a record high. A record $1. 5 billion in 2028, up 40% from last year’s level, according to Statista estimates. By the time Hotel W opens in Marina Bay, Lee says he expects rooms to charge S$800 a night. According to Lee, with all the occasions celebrated in Singapore, “there has been an upward structural shift in room rates in Singapore hotels. “
IOI Properties has also aggressively expanded its hotel presence in Malaysia to take advantage of the post-pandemic boom. In December, it bought the 150-room W hotel in Kuala Lumpur for RM270 million from Malaysian property tycoon Danny Tan’s Tropicana Corp. Last month, it acquired the 199-room Courtyard through Marriott at Penang’s Tropicana for R165 million, expanding its portfolio in Malaysia through seven hotels with more than 2,000 rooms.
Lee says IOI Properties is making a RM500 million investment to build a hotel complex on 12 hectares of beachfront assets on Malaysia’s Langkawi island. When completed in about 4 years, it will feature a 200-room W hotel, a conference center and a shopping mall. The company also plans to invest another three hundred million ringgit to build another hotel in Penang.
IOI Properties also operates the conference market for the 380-room Sheraton Grand Hotel in Xiamen, southeast China. The facility, which is scheduled to open this year, can accommodate an additional 1,500 people in its ballroom. The company is also completing its mall and buying groceries. in Xiamen this year. ” The contributions of those investment houses in China will be very significant,” says Lee.
The two sons of IOI’s founder sit on the board of directors of each of the companies. Lee Yeow Chor, chief executive of the palm oil company, says one of the lessons the two sons learned from their father was how to be “very hands-on” and make a layover. in their companies’ workplaces (plantations or structures). “Our vision is that we should be a major player in both palm oil and real estate,” says the eldest son. “In both cases, there’s room to grow. “
Lee Shin Cheng grew up on a rubber plantation in Malaysia and spoke Tamil, the language of many rubber miners. At age 11, he left school for a while to sell ice cream on his motorcycle to his family. At the age of 17, he became a manager of a rubber plantation and, before the age of 30, a farm manager. IOI’s founder was a born entrepreneur. In 1975, at the age of 36, he started a housing commission south of Kuala Lumpur and seven years later ventured into the palm oil business, obtaining Industrial Oxygen Inc, which would later be renamed IOI Corp. In 1990, Lee bought Dunlop Estates, a primary producer of palm oil, for 500 million ringgit (about $185 million at the time) and used it as a springboard to transform IOI into a primary palm oil player with more than 200,000 hectares of plantations in Indonesia and Malaysia, as well as refineries. and Specialty oil and oleochemical production facilities in Asia, Europe, and the United States.